| |
|
Srithai
Superware
SITHAI
<Bt7.60>
|
|
|
Recommendation
New : LONG-TERM
BUY
Previous : BUY
|
|
|
|
|
2002
earnings below expectations due to rising raw material
prices
|
Srithai Superware (SITHAI)
announced disappointing 2002 earnings of Bt525mn, up 322%
yoy but still below our previous estimate of Bt604mn. The
big jump in earnings from the previous year was due to a
Bt216mn forex gain and a Bt99mn gain from early redemption
of its floating-rate notes (FRN). Normalised earnings were
up 19% to Bt210mn as a result of lower interest expenses.
However, rising petrochemical
prices during 4Q02 eroded the company's earnings. SITHAI
largely uses Polyethylene and Polypropylene (PE and PP) as
raw materials in the production of its plastic products.
With 4Q02 margins shrinking to 23% from 28% the previous
year, normalised earnings fell 91% yoy and 88% qoq.
|
SITHAI income statement |
|
Income Statement (Mn Bt) |
4Q02 |
3Q02 |
QOQ |
4Q01 |
YOY |
FY01 |
FY02 |
% |
|
Sales |
1,018 |
944 |
8% |
1,013 |
0% |
3,776 |
3,787 |
0% |
|
COGs |
787 |
691 |
14% |
730 |
8% |
2,808 |
2,892 |
3% |
|
Gross profits |
231 |
253 |
(9%) |
283 |
(19%) |
967 |
895 |
(7%) |
|
Gross margin (%) |
23% |
27% |
N.A. |
28% |
N.A. |
26% |
24% |
N.A. |
|
SG&A |
200 |
187 |
7% |
206 |
(2%) |
678 |
670 |
(1%) |
|
EBITDA |
161 |
186 |
(13%) |
213 |
(24%) |
743 |
690 |
(7%) |
|
EBITDA margin (%) |
16% |
20% |
N.A. |
21% |
N.A. |
20% |
18% |
N.A. |
|
Interest expense |
28 |
32 |
(13%) |
37 |
(25%) |
207 |
116 |
(44%) |
|
Net profit before extra item |
8 |
67 |
(88%) |
84 |
(91%) |
177 |
210 |
19% |
|
Extra ordinary gain (loss) |
|
|
|
|
|
|
|
|
|
- Forex gain (loss) |
3 |
59 |
(95%) |
18 |
(82%) |
(52 ) |
216 |
N.A. |
|
- Other gain (loss) |
0 |
99 |
N.A. |
0 |
N.A. |
0 |
99 |
N.A. |
|
Net profit |
11 |
226 |
(95%) |
101 |
(89%) |
125 |
525 |
322% |
|
EPS (Bt) before extra item |
0.03 |
0.24 |
(88%) |
0.29 |
(91%) |
0.62 |
0.73 |
19% |
|
EPS (Bt) |
0.04 |
0.79 |
(95%) |
0.35 |
(89%) |
0.44 |
1.84 |
322% |
We are concerned that
SITHAI's 1Q03 earnings will continue to weaken as both PE
and PP prices remain high levels. We assume that SITHAI can
pass on some of its higher costs to its customers but not
all. At least this time, we believe that higher costs can be
passed on to customers given the rising domestic spending
and economic recovery.
With disappointing 4Q02
earnings, we have revised our 2003 and 2004 earnings
projections down 20% and 15%, respectively. Also, our fair
value estimate, based on our DCF projection, has been
reduced from Bt10.70 to Bt9.50.
|
Earnings Revision |
|
|
|
| |
Previous |
New |
% |
|
2003F |
346 |
278 |
20% |
|
2004F |
400 |
339 |
15% |
The company has a very strong
cash flow and financial position. In 2002, SITHAI generated
cash flow of Bt735mn or Bt2.57/share, representing a low
P/CF of 2.96x. Gearing is also very low at only 0.2x, which
should turn to net cash in 2004. The current share price is
undervalued, trading at 2003 PER of 7.8x and EV/EBITDA of
3.5x. Given the prospects of poor 1Q03 earnings, however, we
have changed our recommendation from BUY to LONG-TERM BUY.
|
Financial ratios |
2001 |
2002 |
2003F |
2004F |
2005F |
2006F |
|
Sales (Bt mn) |
3,776 |
3,787 |
3,901 |
4,024 |
4,157 |
4,301 |
|
EBITDA (Bt mn) |
589 |
743 |
690 |
719 |
735 |
759 |
|
EBITDA margin (%) |
15.6 |
19.6 |
17.7 |
17.9 |
17.7 |
17.6 |
|
Normalized profit (Bt mn) |
(176) |
177 |
210 |
278 |
339 |
393 |
|
Net profit (Bt mn) |
(618) |
125 |
525 |
278 |
339 |
393 |
|
EPS (Bt) |
(2.2) |
0.4 |
1.8 |
1.0 |
1.2 |
1.4 |
|
PER (x) |
N.A. |
17.4 |
4.1 |
7.8 |
6.4 |
5.5 |
|
EV/EBITDA (x) |
7.5 |
5.3 |
4.3 |
3.5 |
2.6 |
1.7 |
|
Cash flow per share (Bt) |
1.6 |
1.9 |
2.6 |
2.1 |
2.2 |
2.3 |
|
Price per cash flow (x) |
4.8 |
3.9 |
3.0 |
3.6 |
3.5 |
3.3 |
|
Gearing (x) |
0.7 |
0.5 |
0.2 |
0.1 |
Cash |
Cash |
|
ROA (%) |
-8% |
2% |
8% |
4% |
5% |
5% |
|
ROE (%) |
-36% |
4% |
14% |
7% |
8% |
8% |
|
|
Analyst:
Kitichan Sirisukarcha (Ext. 1570)
Email: kitichan.s@kimeng.co.th
If you have
any questions or suggestions please feel free to email our Research
Webmaster
Copyright © March 2000,
Kim Eng Securities (Thailand) PLC. All rights reserved.
Disclaimer
|